The dollar climbed yesterday and has continued to do so strongly in trading this morning

Having rallied strongly in the morning, the pound relinquished its gains as equities fell, with the pair closing marginally down at 1.6339.

  • In European trading hours, the pound continued to advance after the Bank sounded a relatively bullish note on the economy, saying there had been a “number of developments during the month with positive implications.”
  • There was also no sign that the Bank discussed cutting the interest rate it pays on commercial bank deposits in an effort to boost lending in the UK economy, which Mr. King had spoke of last week, adding downward pressure to the pound.
  • However, the pound lost around 0.75% of its value in the evening as the surprise fall in equities quelled demand for riskier assets.
  • Additionally, the Fed statement in the evening had sounded a more hawkish tone than some had expected, despite confirming that rates would remain at near zero for an “extended time,” which also cautioned traders against over selling the dollar.